Home + Ethical Trade about ETI activities events resources
ETI logo - click for Home Page Randomly generated header image
Google logo
this site:

“Our work to help bring new legal protection for some 600,000 workers in the UK food industry demonstrates the magnitude of our impact.”
— ETI Annual Review 2005/2006

members only
login  • site map • contact • help  es
SIMPLE SITE - click for Home Page with menus

Pilot Interim Review, Nov 1999
continued...

7. Monitoring technique

One of the points we put to some corporate participants was: 'What do you want from the ETI - technique or credibility ?' Although this polarity ignores an important third dimension - the desire to learn about working in unknown or difficult political environments - the question is not completely invalid. The responses tended to be towards wanting the ETI to offer a means of obtaining credibility for their programmes through independent verification of monitoring procedures. The implication was that companies could probably resolve the issue of inspection technique themselves. This view is problematic and overly restrictive, given the experience of the pilots.

Firstly, it remains to be seen which approaches 'worked best' once measured up against the current ETI benchmark, the Principles of Implementation. Since not all the pilots have been wrapped up there remain some unanswered questions.

Some initial points suggest the following:

 

There is likely to be some trade-off between effectiveness and efficiency which ETI members may need to come to a consensus about. This may embrace issues such as the duration of an inspection and the number of people involved, their stakeholder origin, and time spent on site. One farmer raised the desirability of having 'yes and no' questions, in contrast to more open questions. It would useful for ETI to work towards guidelines on what suppliers can expect in terms of on-site times per auditor and auditors per facility.  

Corporate members and suppliers made clear that to be acceptable over the long term monitoring procedures must be:

These criteria tend to favour internal or 2nd party monitoring, but at the cost of access to information which might only be available to wholly independent monitors. However, organising an independent constituent to monitoring has raised major difficulties in some cases, and the learning on this is not yet over. Key issues have been:

Even if solved in principle, organising such an input could raise major problems in practice if inspections were scaled up to embrace dozens or hundreds of suppliers within a sector or country. This is the perspective facing the pilot in Zimbabwe. It raises the questions of: how to build capacity and who pays?

Secondly, companies may have - and do have - differing ideas about technique: whilst some of these reflect different corporate priorities and possibilities, others might simply be inconsistent, and may not, on closer examination, match ETI agreed principles.

Thirdly, companies are at very different levels of development in terms of technique. In some cases, this is a function of the time involved, in others resources. Where possible, the ETI needs to act as a resource for transmitting good practice, and be able to adduce the minimum requirements for ensuring that the Principles of Implementation were fulfilled. This brought up the question again of whether ETI was always working at the right level, and that steps needed to be taken to ensure that high-level commitment was made and followed up, especially in the early stages of membership. It was proposed that the ETI should hold an event ('cocktail party') to realise this. 

7.1 Positive lessons on monitoring

The pilots themselves have thrown up many positive lessons for good practice. In general, it was felt that technical staff visiting suppliers needed to be able to sing from the same hymn sheet and co-ordinate with social auditors.

The following points are a mixture of observed good practice carried out during inspections and recommendations by participants or working group members based on feed back from inspections. They include:

These issues are complex and there is more feedback than can useful be included here. We therefore argue that they should pulled together into a 'Monitoring Technique' workbook. Such a workbook could also draw on the wealth of experience available from company practice not within the pilots, from the wealth of knowledge of ETI members who have looked at these issues over several years and from the broader literature. A workbook of this type, which would be subject to development and revision, would constitute an ETI resource to attract and retain corporate members. 

7.2 Terminology

There still seem to be considerable differences of understanding on terminology used to describe inspection, monitoring and verification. It would be useful for there to be agreement at least within the ETI on this. Several proposals for clarification were circulated in the run-up to the pilots. However, they are not completely consistent with the ETI Principles of Implementation. Problems seem to occur in particular when ETI vocabulary meets the certification companies.

To cite two examples of different understandings: 'auditing' and 'verification'.

In the former case, 'auditing' is often used by certification companies to describe a plant visit (which might be termed 'inspection' in the terms used in the pilots). However, 'auditing' has also been used to refer to 'an external check that the systems and procedures adopted by the company and the supplier are fit to meet the stated aims', and is distinguished from 'verification'.

In the latter case, individuals with an 'auditing' [!] background refer to the verification of documentary claims against physical assets, or the verification of verbal claims against documentary proof. 'Verification' has also been used by ETI members to mean 'independent checks that the inspection and follow-up actions are in accordance with reports compiled by the company'. 'Independent verification' in the ETI Principles is undefined, but is distinguished from 'monitoring' and seems to be close to the definition of 'auditing' cited above.

 

8. Reports, feedback and corrective action

There was a strong feeling amongst some pilot participants (and suppliers) that no more than one day should be spent conducting an inspection, and that rapid feedback needed to be given to suppliers. This raised the question as to the stage at which corrective action and priorities should be determined. For example:

The question was also raised as to how feedback should be given to employees and/or employee representatives. 

It may be that the section of the Principles of Implementation on 'Corrective Actions' needs to be translated into more constructive language which can be given to suppliers - whilst retaining the spirit of the last sentence: 'where serious breaches of the code persist, [ETI members are committed] to terminate any business relationship with the supplier concerned'. This also presupposes agreement on what a 'serious breach' is. [15]

However, ETI concerns have evidently been passed on where feedback has been given, and in some cases remedial action was taken. In Zimbabwe, for example, employees were given copies of their contracts of employment; and steps were taken to ensure that an administrative employee was on hand to explain the make-up of pay and deductions on the individual's pay slip.

Report back from Zimbabwe indicated that suppliers also wanted a quantitative assessment of problems discovered during the inspection, with implications for the resources which would need to be dedicated - and how quickly - to remedying them). This ties in with the issue of defining 'serious breaches' in terms of the ETI Code.

Moving to a more standardised form of reporting would seem to be an urgent requirement if pilots/monitoring are to be scaled up, and reports acquire credibility. This is also closely tied to the design and content of audit schedules.

 

9. Verification 

The issue of verification is fundamental to the future of the ETI and a core element in the commitments which all stakeholders make in becoming members. [16]

So far, the pilots have only barely begun to tackle the question of independent verification, despite the fact that all corporate participants stressed the need to find answers and the fact that they could not acquire the credibility they needed on their own or via 2nd party monitoring. In some cases it was reported that no credible body was on the immediate horizon. More positively, the report back from Zimbabwe offered many hopeful signs as to how a locally-owned, multi-stakeholder monitoring regime might develop and seek external verification - from ETI.

Stakeholders have different demands on independent verification, an issue comprehensively explored in the document 'Open Trading'. Corporate members reported that this was a centrepiece of their interest in the ETI.

Verification and monitoring techniques are intimately connected. If a monitoring regime is unsatisfactory because of its methodology, it cannot subsequently be given a clean bill of health, irrespectively of how scrupulously it has been implemented. Resolving issues of technique may, therefore, have a bearing on how the ETI moves on to address verification. It is also, therefore, important that the detailed lessons on technique learnt in the pilots should be compiled, disseminated and, if necessary, agreed by all sides as a basis for offering a monitoring process which will clear the minimum hurdle of being accepted as a basis for a 'verifiable standard'.

It is also important to establish with suppliers that their facility might be visited by independents. Whether such a visit would take place will depend on agreements reached in the ETI on verification procedures, and in particular on sampling and on what basis such independents might present themselves (period of advanced notice etc.). This has not yet been an issue in the pilots as none has yet moved far enough on. However, it is likely to be an issue soon in Zimbabwe if plans are realised to roll-out a monitoring regime to 500 farms.

The issue of sampling is of key importance here in various respects.

The next stage is to locate responsibility within the ETI for setting up a verification regime in each pilot.

This also raises a number of paradoxes which need clarification.

If monitoring has an NGO or trade union input, can these same organisations locally also conduct independent verification of company monitoring processes and examine a sample of completed inspections? If not, who? One proposal from the Zimbabwe pilot is for the 'ETI' to carry out independent verification (sometimes termed an 'audit'). This raises the question as to how the ETI and its (NGO) members could respond to such a request, given that neither wants to be a certification or labelling organisation.

Another possibility floated in Zimbabwe was for verification to be carried out by one of the international standards auditors, such as SGS or BVQI. This, in turn, would be problematic if such auditing organisations were also retained by suppliers as 2nd party auditors of their facilities against the ETI or another agreed code. (The issue of ETI's relationship with certification companies is aired further below).

NGOs and trade unions are both 'suppliers' of independent credibility but also the main parties to demand it. This demand has, to some extent, shifted to the corporate sector which has accepted that monitoring without independent verification is not acceptable.

As both 'supply' and 'demand', it would seem to fall to the NGOs/TUs to tackle the question of how independent verification can be established, since the corporate sector will inevitably be preoccupied with implementation and monitoring. Specifically:

This leads on consideration of the role of commercial social auditing.

 

10. Private certification companies ('commercial social auditing')

Hiring a certification company has evident advantages for a retailer in terms of efficiency, obtaining standardised results, tapping into extensive expertise and capacity, and holding out the prospect of replicability should a procedure be applied to a large number of suppliers. Although certification companies may not be able to offer precisely the same standard of monitoring everywhere, and may still need to develop competencies in social auditing, the advantages which they can offer - and their desire to capture business - mean that they are a presence which the ETI cannot ignore.

Retailers (and others) in the pilots acknowledged the professionalism of the commercial social auditors, but remain sceptical about accounting companies. It was also noted that certification companies were able to add value by operationalising the Base Code. At the same time, retailers do not want to subject themselves to repeated selling attempts by certification companies, especially if they have not yet arrived at a conclusive view on how they want to manage ethical trading issues.

This raises the question of the appropriate relationship between the ETI, its members, and the certification companies. Moreover, if - as in Zimbabwe - it is possible that certification companies might audit against a code supported by ETI, and in a context in which ETI has set a standard for best practice on monitoring, with ETI ultimately as the agency which would independently verify the overall set up, then should ETI 'technology' be made available to commercial companies. As noted above, a monitoring procedure could fail to be approved (i.e. fail when independently verified), if the technique is deficient. Retailers and certification companies could reasonably ask for detailed guidance from the ETI on how it expects monitoring to be conducted - that is, the disclosure of what is in effect ETI proprietary information gained with the use of members' (and public) money. How should the ETI respond to such a request?

 

11. Development or risk management?

This recapitulates some of the issues raised at various points above, but raises them separately because there was an undertone of concern in the feedback from the pilots.

The ETI represents a coalition of institutions with a mixture of divergent and convergent interests. The ETI can operate because there is sufficient overlap and mutual interest and need to sustain an organisation. Within the ETI the key driver is the desire of corporate members to remove risks to their reputations and operations from poor employment conditions in their suppliers.

Corporate members have a need to work with NGOs and TUs for two reasons:

It was noted above that there might be a trade-off between a broader developmental approach and a more circumscribed monitoring approach. There are good reasons to suppose that under some circumstances, a developmental approach - which touches on broader social issues and seeks to aid in institution-building - will have the capacity to mobilise wider groups of stakeholders and more resources, including, possibly, official resources. It may also feed into learning, because broader questions can be asked of employees, their families etc. In other words, it is not a straight-line trade-off.

The Base Code also has a developmental content in its section on children, for example, and other developmental goals could probably be read off in other areas to which a commitment has already been made. This may be important in securing official support and co-operation.

However, a developmental approach could raise issues of the boundaries of the suppliers' responsibilities and, by implication, those of ETI corporate members. There is also a danger - raised in this review - that a process which is too ambitious or which has overly political overtones could prejudice corporate involvement in the longer term, or cause companies to flee to a simpler, but possibly less robust, process.

 

12. Conclusions

Based on the feedback received from pilot participants and reflections on this, we propose the following - grouped in accordance with the original terms of reference. 

12.1 Lessons learnt for future monitoring processes

The preparatory phase for pilots should be systematised and a Pilot Protocol developed to help in the set-up and management of pilots. This reflects the fact that the pilots have begun to give ETI the potential to develop proprietary approaches. This would address, amongst other things:

12.2 Design of future pilots

Auditable information
Learning from pilots and elsewhere should be compiled into Guidance Notes for implementing the Base Code. In some cases, this might entail expanding on or defining issues in the Base Code, in others specifying indicators on the ground.

There is also extensive experience inside and outside the ETI on the appropriate ways to conduct worker interviews, feedback from within the pilots which needs to be definitively assessed, and a number of methodologies for sampling within facilities. What might be contentious is reaching agreement within each pilot on ETI requirements on sampling for monitoring and independent verification.

Maximise involvement of key stakeholders - North and South
Actions could include:

 

12.3 The contribution of ETI to best practice on monitoring and verification

The ETI is one of a plethora of initiatives and campaigns in the field of socially-responsible sourcing. As such it has to compete for public attention, offer an acceptable forum for addressing employment standards issues for NGOs and trade unions, and secure credibility amongst corporate members and suppliers. What can the ETI offer to win and retain credibility?

The ETI's current unique attributes are.

Fully harnessing the ETI's potential will, however, require further action:

Some of these points are developed further as proposals for improving internal working methods set out below. 

12.4 Changes to internal work methods - dealing with rapid growth in pilots

Scaling up the ETI's activity carries with it the implication that the ETI might move on from being a learning forum and resource to an organisation with a greater operational role in delivering socially-responsible sourcing.

This may be seen as overly ambitious - but the desirability of this needs to be aired. Suppliers may resent being drawn into 'learning processes' from which they stand to gain little. By contrast, some organisations may regard a greater operational role as problematic. At the least, all ETI members ought to have the opportunity to reflect on this as distinct constituencies before the ETI completes the 'pilot' phase and moves onto other programmes.

If the ETI decides to move ahead with more pilots there is much to be said for setting explicit 'strategic' criteria for selecting them. These might include:  

Proliferation of pilots would have implications for the management and governance of the ETI. Would existing practice on chairing be realistic if 10 pilots were running? If not, who would take the lead role and responsibility in pilots? One interviewee felt that the pilots ought to be chaired by members - not ETI staff, whose task was to facilitate from a position of neutrality. However, a trade union participant said their organisation would run into severe capacity problems if pilots were multiplied. Whether the current approach could be modified by an initial high-level sign-off of the pilot proposal would be for the Board to decide.

The pilots also offer lessons for systematising and streamlining the establishment of pilots: this could be worked on separately as a 'Pilot Protocol', with checklists and critical paths to ease the process in future. Such streamlining could lower the required input of chairs and working group members, and enable meetings to be held less frequently, or be shortened. Greater devolution of responsibility to local stakeholders could mean that London meetings could be reduced in number.

Expanding pilots also inevitably raises the issue of finance, which is beyond the remit of this report.

Finally, there was a recognition of the need for 'consistent and quality support' from the secretariat. It was noted that the secretariat support was now 'excellent' with 'superb' minutes and administration.

 

go back prev oContents of this Reporto
 
[ETI Library]		 next go to next

 


top

 back  

Navigation:   site map · search · library · contact · home